Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21.

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Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21. Earnings are expected to grow at 7 percent per year.

a. What is your estimate of the current stock price?

b. What is the target stock price in one year?

c. Assuming the company pays no dividends, what is the implied return on the company’s stock over the next year? What does this tell you about the implicit stock return using PE valuation?

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Fundamentals of corporate finance

ISBN: 978-0078034633

10th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Question Posted: Mar 13, 2014 08:21 AM

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Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21.

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Input Area EPS 235 Benchmark PE 21 Earnings growth rate 7 Output Area a Curre...View the full answer

Fundamentals of corporate finance

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